African markets

Kenya’s economy surpasses pre-pandemic levels in first quarter

Kenya’s economy has rebounded above pre-pandemic levels, with gross domestic product (GDP) growing by 6.8% in the first quarter of this year.

Latest data from the Kenya National Bureau of Statistics (KNBS) shows that GDP grew by 2.7% last year and 4.4% in 2020 thanks to the recovery in transport, food and services.

The sectors have flourished following the reopening of the economy compared to similar periods in which Covid-19 restrictions were imposed by the government to contain the spread of the coronavirus.

Agriculture, the mainstay of Kenya’s economic activity, however, contracted in the first quarter due to lower rainfall during the fourth quarter of 2021 as well as the late onset of rains during the quarter under review.

“Performance was supported by rebounds in most economic activities which had contracted significantly in the first quarter of 2021 due to measures instituted to curb the spread of Covid-19,” KNBS said.

fastest growing

Kenya’s economy has rebounded strongly from Covid, with last year’s figures putting GDP growth at 7.5%, the fastest pace in 11 years.

The Treasury estimates that the economy will grow by 6% this year, driven by strong growth in the service sector and expanding industrial production.

The pace of economic activity was accelerated by accommodation and food services which grew 56.2% in the first quarter of 2022, against a contraction of 33%, on higher tourist numbers amid restrictions of Covid-19 were relaxed.

The number of visitor arrivals through Jomo Kenyatta International Airport and Moi International Airport increased by 85.1% from 121,739 in the first quarter of 2021 to 225,321 visitors in the first quarter of 2022.

Some of the hotels closed during the pandemic have reopened and industry hiring has resumed as demand increases.

The economy was also supported by growth in the financial and insurance sector, as the money supply increased under an accommodative monetary policy.

Cash circulating outside the banking system hit a four-month high of 252 billion shillings in April, an indicator of economic recovery as Kenyans are determined to enjoy the post-Covid rebound.

The transport sector also grew by 8.1% in the first quarter of 2022, compared to a contraction of 7.9% in the corresponding quarter of 2021 following the lifting of restrictions linked to Covid-19.

Growth, however, was tempered by poor agricultural performance, a decline in electricity and water supply, and a slowdown in construction activity.

The World Bank expects Kenya’s economy to slow to 5.5% this year due to concerns over the impact of drought and rising commodity prices.

The Bank said the country will receive below average rains which will negatively affect agricultural performance, leaving nearly 3.1 million Kenyans in need of food aid.

The country’s growth will also be held back by high commodity prices triggered by the war in Ukraine which is fueling inflation in the country.